Posted
by
Soulskill
on Friday September 03, 2010 @03:40PM
from the in-related-news-apparently-people-pay-for-porn dept.

tsu doh nimh writes "Credit card giant VISA International has suspended its business with ePassporte, an Internet payment system widely used to pay adult Webmasters and a raft of other affiliate programs. A number of adult Webmaster forums are up in arms over the move because many of their funds are now stranded. Visa has been silent on the issue so far, but KrebsOnSecurity.com points to an e-mail from ePassporte founder Christopher Mallick saying the unexpected move by Visa wouldn't strand customers indefinitely. Mallick co-directed Middle Men, a Paramount film released in August that tells the story of his experience building one of the world's first porn site payment processing firms, as well as the Russian mobsters, porn stars and FBI agents he ran into along the way. Interestingly, the speculation so far is that Visa cut ties with ePassporte due to new anti-money laundering restrictions in the Credit Card Act of 2009, which affects prepaid cards and other payment card instruments that can be reloaded with funds at places other than financial institutions."

Do you seriously think this restriction by VISA will stop all the attacks you mentioned? I highly doubt it. It's just forced porn sites and the like to use processing companies that they haven't built a relationship with yet.

I blame it on Amazon, who first pushed this as a way for ordinary people to "monetize their web site" back in the early 90s.

I assume you mean the late 90s or early 2000s; the web was launched in 1990, but it wasn't until around 1994 that it started taking off (with very little commercialism at that time), and Amazon themselves didn't launch until '95!

In 95 they were already doing affiliate marketing. One of my friends mentioned it and I said "That is stupid. You only get paid if you make a sale, but you're supplying the bandwidth, etc. And if someone goes back to the site afterwards instaed of passing through you, you get nothing."

Today. people hijack the persistent cookies so that they get credit even if you were the first one that sent a particular person to Amazon. Very profitable for the scammers, not so much for everyone else.

It's cute how your name is commodore64_love and you think that there was no porn on the internet until the world wide web went graphical.

Most people who grew up with 8-bit computers didn't have access to modems or online services, let alone the Internet, some weird academic thing until circa the mid-90s, which most of us had never even heard of.

That said, I do remember downloading porn from text-based bulletin boards when I first got on the net circa 1994....

That's nice for you. Yes, I'm well aware that online services had been available since the early 1980s, but that doesn't mean that the majority of computer users could afford them back then!

Computers in the early-80s were only just getting cheap enough to be an affordable proposition for ordinary people. The modem on top of that would have added considerably to the cost, but I suspect that the astronomical cost-per-minute of services like Compuserve would be the killer.

There were nudie pics and porn passed around in the 80s, but it wasn't "the porn industry" that was behind it. It was individual users sharing with other friends/colleagues.

It was the USERS that made the internet/ online communication popular in the 80s. The porn business deserves zero credit. It's also common to say the porn business made VHS successful and killed Betamax, but that too is a myth.

Yes, back in the day we had to spend half an hour to download a single image but the waiting made it that much sweeeter.

Yep, especially if just seeing her eyes/face/neck was enough; then you could let the download complete in the background while cleaning, and be one of the first in computing history to truly multitask!

And a further thought: what if on some other world, private parts are placed at the top of the organism (perhaps the ground contains a lot more virulence than on our planet). Then, they wouldn't have to wait at all! (I had a similar thought in college, about having eyes on our feet, and the world would then seem to be much more in motion than it currently is. Hi to complex fish of some sort, big Hawaiian guy, jailbait follower, and... oh yeah, knife lover who I had to bail out. Of jail, that is, not hi

Nyet. Inside jokes are tough to determine from the outside. (Amusing, though, to all involved, for various reasons. And also there's no such thing as a lethal dose, but boy did the above-mentioned crew try to find one back in college!:)

The alt.binaries newsgroups were active (And spam-ridden) long before your average person even knew he wanted a computer in his house, and BBSes (A primitive sort of one-server internet that you called on something called a "land line" and then carved the bits out of stone for the remote computer) were popular in about the same time-frame.

he internet existed first (pure text), and porn didn't join the party until the mid-90s when the graphical web was taking off.

I was downloading porn from usenet newsgroups starting in 1987. Sure, there was no snazzy Windows GUI and it was all uuencoded text that I had to decode into pictures. But in 1987 that was pretty cool and exciting.

You do realize that the packets used for the most basic ping test are a few bits of an image of a topless pin up model, right?

Porn joined the internet party in the form of BBS's before the internet was even the internet. I have a record of the file transfer of a single playboy playmate image from 1987. Its the first porno I have a record of on the internet(what was the internet at the time), I keep it for nostalgic purposes, plus she's hot.

Given the money that's there to be made, the legitimate business starts backing away only when the law requires to do so (TFA, new credit card act), involvement with mafia doesn't matter as long as Visa can legally pretend not to see it.

I agree Visa probably still wants the business. Mostly likely they'll patch up the issue with cash reloads (or whatever it is) that makes them attractive for money laundering and then be back to business as usual, which is fine.

Actually I think they'll end up going like MyFreePaysite.com (purposely not linking as it'll get/.ed and I give that site the my "must have teh prons!" clients) where you can have all the professional porn you want for free, and they pay for it by ads for camsites, lubes and toys, etc.

sadly the *.A.As can't seem to wrap their heads around the fact their 80s business model is dead, but sites like MyFreePaysite can find ways to monetize free just fine. In this case the content (the porn) is the lure to hop

I pay for at least one site simply because it's quality is better than the free stuff.

I mean, I can appreciate production value as much as the next guy, but I'll take the hit & miss of sites like burningcamel.com, keezmovies.com, and so on before I make the mistake of giving my credit card to a porn site again. Those guys are almost universally crooks who will keep charging you until you just cancel your card and get a new number.

Well some bill paying companies are independent of the porn sites. Guys like verotel, ccbill, etc... Which are big payment companies with account management/cancel options as part of the payment processor. So you can just login and cancel your subscription without a hassle.

It's like anything else. I generally stick to guys like Amazon, etc. when using my credit card on the internet, or even paypal. As opposed to Joe's cheap cheap cheap electronics, serial number not included.....

i was pissed when paypal did this to me in 2000... so i switched to neteller, then i was pissed when neteller did it to me in 2006, then i switched to epassporte, now i'll switch to one of the other major providers... most support the "pulse" network instead of visa or mastercard, and almost every ATM works with pulse.

nothing to see here except visa losing out on a lot of business because they let the government dictate how they do legal business in the name of stopping potential crime.

I was a software engineer working in a company which had a similar thing done to it by MasterCard (MC from here on). The circumstances may be similar or vastly different, but the program which triggered it was used mainly by online gambling services, and we provided customers with Maestro/Cirrus branded MCs.

The product was ostensibly a prepaid debit card for travellers. The melt-down started when an MC official at an international event received marketing material for the card, and called the help-desk. He was told all about the benefits of the card, including the ‘special’ benefits like being able to load gambling winnings onto it and then withdraw them as cash from US ATMs (I should stress that this was a program operated by our client, not by us; we were just the platform.)

It turns out that this is money-laundering. You just aren’t allowed to market that. So our client (who operated the program) was investigated, and then we (who owned the payment platform) were also investigated. While a handful of people were using the program legitimately, the vast majority were using it for its ‘special’ benefits. MC also found that we should have known about it, and we’d failed to do correct due diligence. The program was shut down immediately, and all cards were de-activated, as its primary purpose was to facilitate money-laundering (we received two hours’ warning, and I had a federal police officer standing behind me while I signed in and deactivated the card range). We lost our licence to access the MC network, and MC gave us 30 days to notify customers of legitimate programs and disconnect. We were successful in getting a court order extending this to 180 days.

MC has strict risk guidelines on this sort of thing. The integrity of the network is paramount: illegal money flows are targeted and stamped out vehemently. They would rather risk disconnecting thousands of legitimate cards than risk losing trust in a network which provides for billions of them.

The real problem is that it’s all private enterprise. Our contract with MC gave them all of these powers: if you don’t want to let MC have this sort of power over you, you don’t use their network. There is no right of appeal, especially for international partners (the court’s authority to even grant the time extension for our genuine legal programs was tenuous, and was only enforceable due to MC wanting to be nice to another party in the chain who was subject to Australian law).

I hope this is interesting information. If you want to know how the story ends, join the club: it’s still going. Perhaps you can visit David Tzvetkoff in a US prison and ask him if he knows.

I suppose what it really gets back to is that VISA is probably not doing this to comply with laws. They know that the best money for an organisation their size is to be made in massive, highly-trusted networks which are beyond reproach. They kick anyone off who might give them any kind of a smudge. Not just pr0n, obviously, I'm talking about money-laundering-style smudges. Which is not, of course, to say that this is what ePassporte was doing: there was neither trial nor opportunity to defend when MC came after us. It was "we're on our way, be ready to turn them off in front of a federal police officer when we arrive." They didn't have to prove that our client was doing anything wrong. They didn't have to prove that we should have known about it. They just decided that they were satisfied, end of story. We only got the extension from the court because they found that MC hadn't met the requirements under the contract to terminate with 30 days notice, and they had to fall back to the "we can kick you off just because we don't like the brand of office chairs you buy" 180 days.

I just looked at the back of my Bank of America Visa logo'd Debit ATM card and I have a Pulse logo. BoA is one of the larger (largest?) banks in the US... I would think many others would carry that logo as well?

This kind of thing happens all the time for companies handling payment processing for adult sites. IIRC Chargeback rates tend to be pretty bad, and made worse by actual billing scams on the seedier sites; so while they're lucrative customers for the banks, they're also prone to falling foul of regulatory limits and having their merchant accounts suspended. The movie tie-in is probably the only reason this is considered newsworthy.

Well, thanks to University of Phoenix, I might not have access to my loan until Spring. I withdrew from there to enroll at a good school, and was informed that there was a conflict with the dates and moving my aid from one school to another.

Phoenix told me when I withdrew that I would have to pay for those classes out of pocket, which I decided to just bite the bullet on since I wanted out ASAP. However, they subsequently proceeded to use my aid money to pay for them anyway.

They had no right to use one of those sets of funds, but they did anyway. Conversion. It's like theft except that they had a right to possess the property temporarily, just not to use it for what they used it for.

Should take about 5 minutes to fix. Call UoP, ask for whatever they call their Director of Financial Aid and Ancilliary Frauds, and tell him you're calling the state A.G.'s office if they don't have a check in your hand by the end of the week. Then if they don't, call the state A.G.'s offic

Thanks. I just found out about this last week, and have been working with both schools to fix it. I was requested by Regis to get a signed letter from Phoenix saying they cancelled the funds. After a couple hours and back and forth phone calls between the different departments (that kept pushing the onus onto other depts) they said I would have my letter in 24-48 hours. A week went by and still no letter, so I called them again and had it by the end of the day.

We had a customer recently who we sold credit card software to. We sell this software to many varying businesses. They are a legitimate business, they just happen to distribute adult DVDs. However, they lied on their form on their merchant bank, and the bank found out and cut them off, and they were unable process cards. After this dramatic happenstance, they then turn around and shopped around for a new merchant bank, but could not, because of the very reason they lied in the first place... because they were worried that if they told the truth no one would take them on.

Now it wasn't right to lie, but they didn't lie in order to launder money, they lied because they would not be taken as a serious business otherwise, and I don't know about you but I think they have that right to be taken seriously. They were let go because banks are adverse to taking a risk on any type of business like this simply in name only. Sure, there are plenty of criminal organizations dealing in porn, but there are plenty of legitimate ones too. Human beings, especially Americans, overreact to porn and sex and try to marginalize it as something demonic. When you marginalize it, you get a group of people who are willing to work with it with varying levels of morals outside of the normal. Mostly you get two kinds of people, those who think porn is perfectly acceptable, and those who think anything including criminal activity is acceptable as long as it makes money. Then less than moral companies sprout up to help the immoral and moral alike deal with this kind of business, you get moral groups popping up saying "See! porn is bad! look at all the criminal activity it breeds!" and you continue the vicious cycle.

So because banks are scared of the adult industry in general because we marginalize it, and by marginalizing it we make it prone to criminal behavior and banks don't want to take the chance, legitimate or not, so we end up with bullshit like this, businesses that are guilty by association and nothing else.

So because banks are scared of the adult industry in general because we marginalize it, and by marginalizing it we make it prone to criminal behavior and banks don't want to take the chance, legitimate or not, so we end up with bullshit like this, businesses that are guilty by association and nothing else.

I'm sorry, your conclusion is flat-out wrong. You had a customer who committed fraud, was found out about their fraud, and was then not allowed to commit the same level of fraud in the future. This has

You're really asking what harm they caused? (I say that because I have respect for you.)

Economic harm, of course; the end result of their fraud is that the review system now needs to be a bit more thorough, so that it can detect liars like these. Which means increased costs for all other players -- so yes, they did gain at the expense of others.

What economic harm? They claimed they sold something (say, Disney DVDs) while they really sold porn. They sold items. They processed credit cards on those sales. The credit card company made money. The seller made money. The buyer got their porn. No one saw harm.

At best, I could see an argument that they "stole" risk. But you can't steal risk. It's not something that you take from someone. But they did not economically disadvantage the other side at all, and even made them profit, so I can't see

Hmm, sorry, by "economic harm" I meant "harm to the economy", not "financial harm to individuals/companies". Note that I'm not saying that they're not a valid business; I personally don't buy into porn thanks to having spent some time with a heart biofeedback device, and can now make things happen just by thinking (which is, by itself, a very, very cool thing, but I digress).

It's clear that they lied; it's clear that there are legal reasons for the credit card company to behave the way they do, even if tho

Hmm, sorry, by "economic harm" I meant "harm to the economy", not "financial harm to individuals/companies".

To sue, one must be harmed. The economy can't sue people. As such, actionable fraud doesn't occur if one harms the economy rather than a specific person who can point to harm they received.

Sure, my argument may be somewhat "specious" because it could be argued that this is a drop in the bucket, but enough drops cause the bucket to overflow, so even if it is just a drop, my argument is that this

Actually, it's not because the banks marginalise it, it's because adult processing has a chargeback rate significantly higher than most other business types, so of course they'll be paranoid about it. Also, the reason that client of your couldn't find a new bank is because when they were terminated for lying on the application, they would have been added to the TMF and therefore every other potential provider can see that they have been blacklisted once, and why.

These new 'money-laundering' rules are going to impact merchants and processors significantly. Visa is probably happy to be rid of a business with massive fraud, payment issues, and scams on every corner.

Next up will be gambling sites, mostly the poker sites which in general should be burnt off the Web for the faurds they commit, not to mention the money-laundering potential. Imagine watching user A play like a fool and lose $100k to user B, knowing all along this is the equivalent of wiring the money to user B and suffering the house's rake as cost of shuffling the funds. This is an international problem, and the only thing that stops this from happening more is that 'legitimate' poker sites do everything to keep you from actually receiving your winnings. A poker site built to facilitate laundering wouldn't bother with that nonsense, but it would discourage players other than the intended 'clientele' from playing big-stakes games (probably by using a buy-in or premium membership to keep the riffraff out) and thereby preventing unexpected players from receiving funds expected to just be 'won' by the laundering destination.

Amazingly creative these people are. The 'legitimate' poker sites rake enough, and of course are mostly pure scams, with bots hammering on live players and some people making money a few bucks at a time. The fraud and disputes are rampant, and most processors want nothing to do with this business, so they have holdbacks and huge discount rates and fees if they bother at all. Being offshore makes matters worse, and users in the U.S. for instance will have no help from anybody collecting their winnings, so they often dispute their membership fees and such, with the predictable result that the site essentially survives by scamming its users while the users are scamming each other. There is no good in online poker. None.

This is one of the darker corners of the Web. These 'money-laundering' rules will impact these businesses a lot.

And, of course, these rules will also aid in collecting taxes. The IRS is in the midst of implementing rules to use credit card processors to provide payment data which is matched to the merchants' tax reporting. If something is wrong, the IRS has the power to garnish the intended credit card payments and deliver them to the business only if they agree that the taxes were collected and all is well. And if there is a problem with the merchant's records, and the processor has some typo or error in the merchant's files, they have to send the money to the IRS and the merchant may^H^H^Hwill wait for an entire quarter to get their money back, less anything the IRS decides to withold. I say 'money-laundering' because a lot of the motivation here by the government is to get more data and get into the payment streams.

What a load of bullshit. Thousands of people make a lot of money online, and you can track them on sites like officialpokerrankings.com or pokertabletatings.com. There are online communities like twoplustwo.com or pocketfives.com where most of the top winners are well known in real life. High end laundering as you describe would be tracked and easily noticed by a large community that follows the "nosebleed" games. It is also (still) very easy to get winnings off, if it wasn't people would stop playing.

"Mostly pure scams"... no evidence, no citations, how on earth did this get +5 insightful.

It's incredibly difficult (and expensive) to get credit card processing for an adult entertainment business, and the cartels (Visa/MC/Discover/Amex) don't want to make it easier. In my three years' work for a site [wikipedia.org] dealing with just this kind of issue, here's what I found:

You pretty much can't get processing in your own business name if you're up-front about what you do, in the United States.

You can't get processing in Europe, either, unless you're actually in the EU. Opening a shell corporation won't help, and even then, it's also impossible.

You might be able to get "high risk" processing outside of the United States, out of somewhere like Vietnam or the Philippines. If you do, you can expect games with your money.

You can expect to have your bank hold on to your funds a minimum of three months. This is not something like a 5% rolling reserve. It is, instead, a 100% rolling reserve.

You can expect your contract to say that when you end your contract (even at the end of term in the normal course of business), your processor can hold onto 100% of your money for an additional year, starting as soon as you give your required six months notice.

You can expect your contract to say that you surrender your domain name to your processor in perpetuity.

You can expect to pay as much as 25% of revenue for this "service."

You can expect to find it impossible to open even a normal checking account into which to deposit your funds, because no bank in the universe will want to deal with you, simply because you run an adult business.

About the only semi-reputable (caveat emptor) business that will do billing for adult websites is CCBill [wikipedia.org]. You can expect to pay CCBill at LEAST 10% of your revenue [ccbill.com], and if you want to take Visa, you have to pony up another $750 non-refundable startup fee [ccbill.com], and a $500 annual fee [ccbill.com], on top. Approximately 40% of adult transactions are Visa, so not accepting Visa isn't a viable option for most businesses.

CCB's software absolutely sucks. It is bloated, slow, doesn't give good control over affiliates and their production, and doesn't produce usable reports. And, I have never once given an email address to CCBill (yes, I use unique addresses for such transactions) that didn't get sold to a spammer. This includes addresses I gave to them in a business relationship, not just buying a website subscription.

Verified by Visa and MasterCard SecureCode, which are supposed to eliminate chargebacks, are not available to adult entertainment sites. No explanation has ever been given about why this is so, but if you run porn, you can't use these "enhanced security" services.

CCBill supports only subscription-based services. They don't support physical good sales. Want to sell DVDs, t-shirts, photographic prints, USB keychains, or other goods along with your site subscriptions? Too bad.

No well-known payment service aside from CCBill allows porn. This includes PayPal, Google Checkout, Moneybookers, and the rest. Want to sell legal second-hand DVDs on eBay? Good luck figuring out how to get paid. I have a warehouse full of stuff I basically can't sell because I can't get paid.

One of the reasons problems are so rampant in credit card processing in adult entertainment is that the cartels have made it nearly impossible to get legitimate processing, and so businesses that want to take credit cards have to resort to quasi-legal tactics to be able to run them. It becomes a self-fulfilling prophecy.

One of the things I looked into was the possibility of creating, essentially, a pornographer's bank. The bank would adhere to customary American banking law, but would explicitly accept legal adult entertainment business. The question we co

It is PERFECTLY possible to set up an alternative to Visa and Mastercard. The only reason no-one has managed yet is because the cost of a new hardware rollout would be prohibitive - if you were silly enough to try and replicate a model which is 15 years old and no longer needed (so you don't, basically). Visa/Mastercard don't care about fraud losses because they have you paying for it in transaction fees.

However, you need a sponsor who can cough up approx $75M or so to set up the first business. In 3 yea

I'm drinking without drinking alcohol.I'm gaming without gambling.My adult media content is not adolescent gratuitousness, but challenging and informative content that requires some life experience to appreciate.My adult language is educated and domain terminology that children might not understand yet.